How incomplete nongrantor trusts can help avoid state income taxes

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Abstract: With the federal gift and estate tax exemption at $5.45 million for 2016, traditional estate planning may not be helpful for many people. Instead, those whose estates are below the exemption amount are shifting their focus to income tax reduction. High-income taxpayers — particularly those who live in high-income-tax states — may want to consider incomplete nongrantor trusts, which make it possible to reduce or even eliminate state taxes on trust income.